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Go in one pocket and out the other pocket.  This is simply known as cash flow – and it’s huge to know about.

Every one seems to talk about the subject, but not necessarily in the right context.  For example, getting out of debt can decrease cash.  By paying higher payments or accelerating payment, more cash leaves your pocket.  Once everything is paid off, your cash flow would increase.  In the mean time, the bank has had increased cash flow.  Notice who has more money in the end – the bank?

Actually, many people probably don’t talk about cash flow until times are hard – then, it may be too late.

Take a look at taxes.  You pay estimates all year long and hopefully get a refund, right?  You have given increased cash flow to the government to use based upon estimated net income.  Have you noticed you don’t get money back quickly?  This limits the cash flow to you.

In a business plan, cash flow projections are huge.  Why?  Money coming in to operate the business.

Why don’t more people think like this personally?

Obama and others blame business, banks, loans, regulators, etc. all day long, but what about education?  Why not make bookkeeping or accounting mandatory in public schools?  (Probably so people won’t pay attention to money matters and look to government for help.)  I’m not here just to bash Obama, but he wants more control over the financial industry – his actions are facts.

Even if you do not do anything with your money and stick it in the mattress, this money goes out your pocket.  How you say?  Inflation.  My kids and I like apple pie.  One year the pie cost $1.  The next year, the pie cost $1.09 and they are out of luck if all they had was a dollar.

What’s the main point here.  Keep cash working in your favor.  If you are going to “pay” alot of something, make sure it’s attention.  Otherwise, the money is moving from one pocket instead into the other.